Record Detail Back
BENEFITS OF NARROW BUSINESS STRATEGIES
- Share to:
Firms often claim that they concentrate on a narrow range of activities while other activ- ities
are shunned even though the firm could make positiveprofitsin them. The pursuitof
such narrow strategiesreceives applausefrom some academics who study strategicman-agement.
We present two related theoretical models in which firms do indeed benefit from
pursuing narrow strategiesand foregoingapparentlyprofitableopportunities.One benefit
of a narrow strategy in these models is that it enables the firm to motivate its employees to
search for valuable profit-enhancinginnovations. We obtain this result in an environment
where contracts are incomplete so that employees can only be remunerated for their ideas
when their innovations are adopted. The disadvantageof broad firms in this settingis
that they are tempted to make ex post inefficient adoption decisions.
Julio J. Rotemberg - Personal Name
1000156290
NONE
Management
English
2013
1-54
LOADING LIST...
LOADING LIST...